The prices of gold declined slightly on Tuesday as the U.S. dollar recovered. The greenback rose by 0.1% against a basket of rival currencies, which makes the bullion more expensive for investors and traders using other currencies. The yellow metal was also pulled down by the rally of Wall Street’s main indexes support by the rise of tech stocks.
Spot gold (XAU/USD) is currently trading at $1,921.51 per ounce as of 0826 GMT. Spot gold posted a loss of 0.4% yesterday to snap a three-day winning streak,
Another factor affecting gold is President Donald Trump’s call on Congress to pass a stripped-down version of the COVID-19 stimulus package after negotiation between the White House and Democratic legislators continue to produce positive results. White House Press Secretary Kayleigh McEnany said Senate Republicans are likely to give what Trump wants. A smaller coronavirus stimulus bill would impact the demand and pricing of gold.
OCBC Banks economist Howie Lee commented that the absence of further downside to the dollar weighs on the bullion. The passage of the stimulus measures would naturally lift gold prices, but it appears that Congress would not be able to pass one before the November elections.
Meanwhile, investors are also monitoring the elections in November. Trump, who already tested negative for COVID-19, has resumed his campaign. However, some experts predicted that Democratic presidential candidate Joe Biden would beat him. RJO Futures’ senior market strategist Bob Haberkorn believes that a Biden victory will favor gold because he will spend a lot of money to support economic recovery.
Another factor that supports the yellow metal is the increase in coronavirus cases in major economies, including the U.S., the UK and several countries in Europe. It adds to the uncertainty over the economic recovery from the pandemic.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust rose by 0.48% to 1,277.65 tons yesterday, which reflect market sentiments. Silver prices pushed slightly lower in the early day, diverging from the yellow metal after hitting resistance in the $25.50 area.